Maintaining accurate financial information is a top priority for companies across all industries. However, many private companies struggle to obtain timely and accurate financial data and conduct fundamental analysis due to different factors. The most common one is bad reporting by your financial staff. Errors in the balance sheet lead to an inaccurate income statement. And having issues with one or both can have a significant impact on decision-making and financial management.
There are two ways to solve the issue of poor reporting. One is devoting more time to detailed financial research and oversight, and the second one is outsourcing. Both solutions will bring benefits if implemented correctly, but outsourcing does have an edge in this situation.
Improving Your In-House Financial Reporting
Demonstrating your company’s financial performance and health strongly depends on accurate financial analysis and retrieval of important and accurate information. In-house teams may find it challenging to keep up with constant regulatory changes and technological advancements in finance. And investing in new technology may stand in the way of your wealth management plan.
To overcome these challenges, many companies have started using finance-as-a-service. If you are managing your finances on your own, here are a few suggestions that should help you get more accurate financial data about your company.
- Understand your company’s KPIs (Key Performance Indicators) and include responsibility in the reporting process. Staff members that prepare internal and external financial statements should be responsible for reporting on material changes of your company’s KPIs.
- Those who issue monthly and annual financial statements should have more oversight. Getting involved in the process ensures accurate reporting and efficiency.
- A company owner should have complete knowledge about financial reporting and be prepared to challenge any inaccuracies or questionable entries in the annual report. Financial statements shouldn’t lack accuracy at any given moment, and additional oversight lowers the chances of bad reporting.
- Communicate with your financial department whenever you feel the need to but also ask them to “prove” the numbers on your financial statements.
- Include a screening process when hiring new financial staff. Many candidates overstate their experience on their resume, so you should know how to evaluate their actual level of expertise.
- Complete a criminal background check for every new employee. The risk of employee theft is always present, so a clean criminal background is something you should be aiming for. On the other hand, insufficient oversight of your financial department can be counterproductive in this situation.
- Include employee benefits for those who consistently perform well. A staff member that can consistently deliver an accurate cash flow statement should be recognized as a valuable asset in your company.
Understanding The Downsides of an In-House Accounting and Financing Team
Business leaders that choose to handle their own finances can actually slow down their business development. When doing their due diligence, investors conduct thorough company research and take a deep dive into your balance sheets. Inaccurate financial reports can yield negative results in their investment research, and your company will be left behind due to bad financial reporting. Research reports usually include:
- Balance Sheets
- Current Assets and Liabilities
- Non-Current Assets and Liabilities
- Financial Position: Book Value
- Market-to-Book Multiple
Understanding and keeping track of all these can become exhausting at some point. With outsourced finance, you don’t have to worry about any of the items on this list.
To grow your business, you need to continually conduct market research and keep track of your financial performance. Bad financial reporting can disrupt all of your plans and drive investors away. That is why many business owners are utilizing outsourced accounting. Having a remote accounting staff that is available on-demand is just one of many benefits that come with outsourcing. Providers of these services usually offer the following:
Bookkeeping and Back-Office Support
With outsourced finance, you can either replace or assist your in-house staff. Skilled outsourced staff members can help with payroll processing and financial planning but also serve as a valuable knowledge base for your own staff.
Financial controllers are individuals that ensure proper internal controls and maintain a business’s financial health.
Financial Planning and Analysis (FP&A)
Professional staff members provided by your outsourcing partner enable easy financial planning and accurate analysis.
CFO Consulting Services. Company financial data and business plans are handled and executed by skilled staff members.
Benefits of Outsourced Accounting
It is now more than clear that finance-as-a-service provides access to better and more accurate financial reporting. By receiving financial information in easy-to-read formats from your outsourcing partners, you can expect to spend significantly less time reviewing financial information which gives you more time for planning and analysis. On top of all that, outsourced accounting completely removes the need for an in-house accounting department that burdens your financial management. Spending more on client retention and generating pipeline is now an option thanks to outsourced solutions like Consero.
One of the biggest advantages of outsourced accounting is the access to advanced tech solutions you would otherwise have to acquire exclusively for your company. Cloud-based solutions like SIMPL provide an easy way to look into and understand your financial position. These functionalities include:
- Current cash position
- Accounts receivable & accounts payable balances and details
- Interactive monthly financials
- Custom financial reports
- Graphical trends for revenue and spending
- Status of finance team deliverables
Advanced software solutions can deliver accurate reports in far less time than an in-house team would need. All of the required information is available with 24/7 remote access. In terms of operational costs and efficiency, this self-service will always outperform your in-house back office staff.
There are many things you can do to increase the accuracy and quality of your financial reporting, but it always comes down to your staff’s capacity. In-house accounting can often be very slow and provide inaccurate data consistently. One small mistake can cause significant problems in the long term. If business owners aren’t familiar with the reporting process, many errors can get past them. Since constant oversight isn’t an option for a vast majority of business owners, outsourced accounting has become an emerging trend that solves the problem efficiently and cost-effectively.
A reliable outsourcing partner will make sure that you are always aware of your financial health by completely freeing you and your company from the accounting process. Request a demo today and find out how finance-as-a-service can help your business scale and grow with minimal investment and distractions.